2023 (5) TMI 147 - AT - Customs

Smuggling - recovery of Gold - foreign origin - illegally imported into Indian Territory or not - invocation of burden to prove u/s 123 of the Customs Act, 1962 - Confiscation - penalty

Whether Section 123 of the Customs Act, 1962 is invocable in the given set of circumstances? - HELD THAT:- The burden of proof shifts under Section 123, when (a) there must be goods to which the section appliers; (b) the goods must have been seized; and (c) the seizure must be under a reasonable belief that they are smuggled goods.

Reverting to the facts of the present case, it is observed that at the time of interception and preparing of Panchanama about recovery of gold from Shri Gudipati Subba Reddy and Shri Pathan Jaffar Sadik, they both in their statement as was recorded under Section 108 of Customs Act, 1962, admitted that the gold in their possession was actually a gold of foreign origin, however, it got remelted for erasing the foreign markings but 99.9% purity mark was still got embossed thereupon. They also admitted to have no documents for proving that they were legally possessing that quantity of gold in several number of uneven pieces. These particular admissions, are sufficient to invoke the theory of reverse burden of proof i.e. the burden of proof that the gold recovered is not the smuggled on lies upon Gudipati Subba Reddy and Pathan Jaffar Sadik in terms of Section 123 of Customs Act, 1962.

The statement got recorded by customs officer is the material piece of evidence which can be used as substantive evidence connecting the deponent with the contravention of the customs act - there are no reason to reject the statement of both the appellants from whose possession the gold in question was recovered about admitting the gold to be a foreign origin - the findings arrived at by the adjudicating authorities below that Section 123 Customs Act, 1962 has rightly been invoked, is accepted - thus it is held that Section 123 of the Customs Act, 1962 has rightly been invoked by the department.

Whether the gold recovered in question was actually the gold of foreign origin illegally imported into Indian Territory and thus is liable for confiscation? - HELD THAT:- There appears no evidence to prove the gold recovered from Shri Gudipati Subba Reddy is the gold which got melted by Shri Shaik Imtiyaz. This observation receives corroboration from the statement of Shri Shaik Imtiyaz that shape of remelted gold given to Shri Gudipati Subba Reddy was always used to be uniform in one shape and the pieces were never used to be uneven broken or cut. He even stated that he cannot remember that he had melted a large quantity as that of 2000 grams of gold on 06.10.2020. Similarly Shri Jadhav Duryodhan also acknowledged melting gold for Shri Pathan Jaffar Sadik but he also has emphasized that he always used to return the melted gold into one piece of uniform shape instead of those being into several pieces of cut and uneven shape - Apparently and admittedly the gold recovered from the possession of Shri Gudipati Subba Reddy was in the form of two gold bars and six small uneven and cut pieces and the one recovered from Shri Pathan Jaffar Sadik was in the shape of one bar and three small uneven cut pieces of gold. These observations are sufficient for me to hold that even the retracted version receives no cogent proof rather it is highly insufficient to prove that the recovered gold was actually of Indian origin or was being traded by legal means.

The only document which has come up on record is in the form of two invoices, one issued by M/s. Penava Gold and another from M/s. Badradri Bullion & Jewelers. But the description of gold in those invoices does not match to the description of the gold recovered - Perusal thereof shows that each piece has some embossed inscription as contrary to the statement of the appellants that the impugned gold was FT gold out of old ornaments. None of the statement recorded during investigation has any explanation about those embossed inscriptions on the recovered gold pieces. Nor there is any evidence to justify the 999 purity marka thereupon.

The gold of Indian origin is generally of 916 purity (22 carat). Bureau of Indian standards has certified BIS 916 22 carat, BIS 958 23 carat, BIS 750 18 carat, the 999 quality is the 24 carat gold. It is 22 carat gold which is used in ornaments. Hence for India, the most popular quality of gold is BIS 916 instead of 999. Admittedly the recovered gold was of 999 quality. Apparently the melters of the gold have acknowledged that FT gold that is the gold received after melting the ornaments is generally of 95 to 99.5 purity. One of the melter has apparently gone to the extent of admitting that FT gold can never have 999 purity. None of the appellants have placed on record any evidence showing as to how the gold recovered from them was having 999 purity - there are no reason to differ with the findings of the adjudicating authority below that all the appellants had full knowledge of the impugned gold to be the gold of foreign origin and knowingly they were dealing with the same for monetary benefits. Their act gets definitely covered under Section 111 of the Act making the recovered gold liable for confiscation. It is accordingly held that confiscation of recovered/seized gold is rightly ordered.

Whether appellants are liable for penalty? - HELD THAT:- It is clear that the appellants in this case had acquired possession of such gold which they could not prove to be of India origin. There has been no denial that they were purchasing the gold at the cheaper rate which rather corroborates that they were in possession of smuggled gold. Section 112(b) of the Act is wide enough to penalise even a person acquiring possession or in anyway dealing with the goods which he knows or has reason to believe are liable for confiscation under Section 111. Thus it is held that the appellants had rendered them liable for imposition of penalty.

Three of the questions of adjudication as framed earlier stands decided in favour of the Revenue and against the appellant - Appeal dismissed.